What Is a Voluntary Arbitration Agreement

Compared to litigation, arbitration is relatively inexpensive, short and confidential. Courts generally refuse to overturn arbitral awards and can intervene to ensure that they are enforced. This means that arbitration leads to final outcomes that allow the parties to move forward while avoiding the public scrutiny that can accompany court proceedings. Over the past two decades, it has become increasingly common for companies to require their employees to sign arbitration agreements. These agreements require that all disputes related to an individual`s employment (including complaints of discrimination or harassment) be resolved in private arbitration and not in a courtroom open to the public. And as a general rule, these arbitration agreements provide that the arbitrator`s decision is not subject to judicial review, which means that the arbitrator`s decision is final, even if the arbitrator has misinterpreted the law or misunderstood the facts. The guidelines for arbitration are generally as follows, write Sarah Rudolph Cole and Kristen M. Blankley in their chapter “Arbitration” in The Handbook of Dispute Resolution (Jossey-Bass, 2005). Together, the parties select an arbitrator from a list provided by an arbitration company.

Arbitration takes place in a private conference room in a public courtroom. The arbitrator begins by presenting the ground rules; Then each party makes an opening statement, or its lawyers do. Each party then presents its evidence and, if necessary, calls witnesses to substantiate its allegations. During this time, the arbitrator may ask questions to clarify their understanding of the issues (for more information on the pros and cons of arbitration versus mediation rather than dispute resolution, see also Mediation Arbitration and Alternative Dispute Resolution (ADR)). Signing an arbitration agreement has advantages and disadvantages. The benefits are as follows: In response to various court decisions stating that arbitration agreements were unenforceable, the Federal Arbitration Act (FAA) was passed in 1925. Under this Act, arbitration agreements are largely valid and enforceable. However, if an arbitration agreement violates general contract law as applied to all contracts that fall under the law of the State subject to the agreement, that arbitration agreement is unenforceable.

This is the most important exception to the provision of the Federal Arbitration Act. Sometimes the arbitration agreement contains only a few sentences. However, an arbitration agreement may also contain additional terms, such as.B. an overview of the issues that are the subject of the arbitration or how the arbitration is conducted. Arbitration is an alternative means of dispute resolution that allows the parties involved to resolve a dispute without having to go through the courts. Instead of your case being heard before a judge, your dispute will be heard by an arbitrator at an arbitration hearing, which is usually much more informal than a court hearing and usually takes place in a conference room. The procedures are also less strict than the usual court procedures. Should you sign an arbitration agreement? If you agree to voluntarily participate in a possible future arbitration, jointly establish the ground rules of the arbitration, and jointly elect an impartial arbitrator, you will likely find that arbitration is not only inexpensive and expeditious, but also fair. If, on the other hand, you feel compelled to sign an arbitration agreement, consult a lawyer and discuss your options and possible future scenarios. Whether you`re a small business owner about to sign an employment contract or you`re an employee hiring for a new job, chances are the legal documents associated with it will include an arbitration agreement in one form or another.

However, before signing such an agreement, you need to understand the possible consequences. Consumer advocates have fought the practice of businesses requiring consumers to sign arbitration agreements, arguing that consumers generally do not know that they have waived their procedural rights and because arbitration decisions regularly favour businesses over consumers (for more information on disputes regularly resolved by arbitration, see also Employee Complaints: Most Disputes are resolved through arbitration or litigation?). In a survey of 19,000 mandatory arbitrations in California handled in 2003 by arbitrators appointed by the for-profit National Arbitration Forum (NAF), the nonprofit watchdog group Public Citizen found that companies won over consumers in 94 percent of the disputes. Legal restrictions on forced arbitration are still ongoing and depend on the judicial system of the state and territory of the country where the agreement is being tested. Some courts have adopted the practice of forced arbitration, while others are skeptical about the application of such agreements against reluctant employees. .